The view of North Korea (upper left) across the river from Dandong, China, is almost completely dark at night, while the Chinese side is aglow.
MAY 2017
We stood on the promenade along the Chinese side of the Yalu River, which separates the People’s Republic of China from the Democratic People’s Republic of Korea. Lights glimmered and neon signs flashed from the high-rises that loomed along the Chinese side of the river. But when we gazed into North Korea, there was nothing, nada, zilch. There was only pure darkness, even though the moon was shining brightly. Supposedly Sinuiju, a North Korean city populated by more than 350,000 people, and one of the country’s most important trade hubs with China, lay in that darkness on the other side.1
We had just had dinner in the Koreatown neighborhood of Dandong with documentary filmmaker Dean Peng, who not only shared our passion for hard-core libertarian economics but had also volunteered to act as our translator and fixer in China. (We had been introduced by our mutual friend Li Schoolland, a Chinese-born free market advocate now living in Hawaii.) We had hoped to talk with émigré North Koreans, but that proved difficult. Our young North Korean waitress of Chinese parentage, for instance, had recently emigrated because she wanted a better life than was possible in North Korea, but she was quick to add that North Korea wasn’t as bad as some people said. When she talked about North Korea she practically shook with fear, as if worried that any criticism would get her in trouble. Respecting that, we didn’t press her for more information.
Of course, as a child of two Chinese parents, she was one of the lucky ones. Most native North Koreans who escape to China are captured by the Chinese authorities and returned to North Korea, where they might be executed and their families sent to hard labor camps.2
The ones who do escape successfully often go through harrowing ordeals. We were familiar with Yeonmi Park’s book In Order to Live: A North Korean Girl’s Journey to Freedom.3 She had escaped to China when she was thirteen, but her smugglers raped her and told her she would either be sold to sex traffickers or returned to North Korea. She escaped both fates and was a fugitive in China for two years before she found Christian missionaries who smuggled her to safety in Mongolia.
So we understood why people like our waitress might not be so talkative.
After dinner, we strolled the promenade along the river, but there wasn’t much going on. I saw one strip club and suggested we investigate. Dean didn’t think it was a good idea. We’ve been to our fair share of strip clubs around the world, and usually have no moral reservations about visiting one. The vast majority of strippers choose to work in clubs because it’s their best option for making money, and we have no problem helping them in that endeavor. But there, on the North Korean border, we did have reservations. Many North Korean refugees are coerced with the threat of deportation if they don’t agree to work in the Chinese sex industry. Although I was interested to see what the club was like, and to see if we could learn anything from refugees, we ultimately wanted no part in propping up the traffickers, so we heeded Dean’s advice and walked on.
The next morning, when we opened the curtains in our room on the twenty-first floor of our hotel, we were surprised by Sinuiju. Invisible the night before, daylight revealed dozens upon dozens of mid-rise commercial, industrial, and residential buildings just across the river. They weren’t nearly as numerous, nice, or tall as the ones in Dandong. But still, ten-story, semi-dilapidated buildings were plentiful.
The view of North Korea (upper left) across the river from Dandong, China, is almost completely dark at night, while the Chinese side is aglow.
Same view in the morning: the North Korean side reveals itself to be a city of small buildings with little sign of life compared to the busy Chinese city. But unlike at night, at least you can tell it is there.
We’d come to Dandong to get a closer look at North Korea, but our adventure had started about a week earlier in Seoul, South Korea. The Korean peninsula is a rare natural experiment where capitalism and socialism can be compared side by side. The comparison is particularly informative because North and South Korea share a common history, language, culture, and, before they split, level of economic development.
The North is a bit colder and more mountainous, but those differences hadn’t disproportionately hindered development in the North before the split. At the end of World War II, North Korea had about 80 percent of Korea’s industry, 90 percent of its electrical power, and 75 percent of its mines: iron, tungsten, silver, and uranium.4
The Korean War left the entire peninsula devastated. Perhaps the North suffered greater losses, but it quickly rebuilt with Soviet military and economic aid. It’s impossible to accurately measure incomes in socialist countries, because they lack meaningful prices, but by most accounts, average GDP per capita was roughly the same between the North and South in 1960.
The most significant difference was that North Korea was a Communist state with a socialist economic system, while South Korea was an authoritarian but eventually democratic state with a capitalist economic system.
In North Korea, all private businesses and industries were eliminated by the late 1950s, and private agriculture was largely abolished and replaced with collectivization, where farmers grow produce for state warehouses that then distribute the food.5 North Korea followed a Soviet model of development, focusing its economy on heavy industry and the military. It is also a totalitarian police state enforcing the most thoroughgoing socialist economic system in the world.
South Korea, by contrast, is basically capitalist. In Bob’s economic freedom index, South Korea scores 7.54 out of 10 points. That leaves it less economically free than top-rated Hong Kong (8.97) and the eleventh-ranked United States (7.94). But this still leaves it in the top 80th percentile of countries scored. From the moment we landed, South Korea was impressive. We breezed through Incheon International Airport, which had been ranked as the best global airport for nine consecutive years (through 2013) by the Airports Council International. Even the immigration and customs process, which usually royally pisses Bob and me off, was only a minor annoyance. We were in a modern Kia taxi and headed into Seoul in no time, darting through relatively light Saturday afternoon traffic. Glancing out the windows, we saw Seoul’s hills and valleys covered in modern buildings.
After the long flight from Dallas, we wanted to get onto Korean time right away. To us, that means getting drunk and passing out at the local bedtime. In addition to researching this book, Bob and I were also speaking at another meeting of the Mont Pelerin Society, and some of our friends had already arrived. After checking in, we met up with our bald, cigar-smoking drinking buddy and raconteur of raunchy jokes, Steve Gohmann, who runs the Center for Free Enterprise at the University of Louisville.
We found a great Korean barbeque with delicious pork belly and kimchi and ended up smoking cigars outside a Belgian beer bar. Despite being on the opposite side of the planet from where they were brewed, the beers were cheaper than in high-tax Sweden, which meant we would buy more of them, and Belgian beers have around double the alcohol content of American lagers, so we succeeded in adjusting to local time quite rapidly.
Seoul is massive. Its total economic output ranks it fourth in the world among metropolitan areas (behind Tokyo, New York, and Los Angeles). Fifteen Fortune Global 500 companies, including Samsung, LG, and Hyundai-Kia, have their headquarters in Seoul. Its more than twenty-five million people live well too. Average incomes, adjusted for cost-of-living differences, amount to more than $42,000. It’s hard to get an accurate picture of a country’s economy without looking beyond its capital city. But in South Korea’s case, average incomes in Seoul are only about $5,000 higher than the national average.6
Since 1960, South Korea has rocketed from a pre-industrial standard of living to being a wealthy first-world country. Life expectancy has improved from fifty-three to eighty-two years. Infant mortality is now just three deaths per 100,000, down from eighty-one in 1960, a whopping 96 percent reduction! Incomes have more than tripled after adjusting for inflation.7 Virtually everything has improved.
That night when I stumbled back into my hotel room after drinking with Bob and Steve, I encountered a problem: The toilet had more buttons than my iPhone’s home screen. There were buttons with butt cheeks and dashed lines of spray, a girl’s face, a dryer, a bathtub, a child, hi, low, front, back, water, light, seat, and more. The last time I’d tried to use a similar computerized toilet in Tokyo, I got cornholed with scalding water. I made the only sensible choice. I pissed in the shower and went to bed. But capitalism has done pretty well for Seoul if this is the worst we encountered.
Seoul is only 35 miles from the North Korean border. The 1953 cease-fire after the Korean War established a 2.5-mile-wide demilitarized zone (DMZ) all along the 160-mile border to serve as a buffer between the countries. We joined our fellow conference attendees for one of the standard tours along the DMZ. Most Americans who want to see North Korea do so on one of these tours, but unfortunately, there isn’t much to see. It was a gloomy and foggy day, so we used tourist binoculars to see across the Han River and the DMZ into North Korea. Only a couple of small farming villages and isolated homes were visible in the distance. This was no way to gauge how North Koreans lived or how their economy operated.
Ideally, we’d fly to Pyongyang, the North Korean capital, and then travel around the country a bit and observe what we could. But North Korea allows U.S. tourists into only carefully controlled staged areas within the capital city. Tourists are constantly accompanied and monitored by government employees. Traveling freely and observing normal people is not an option.
Even with those limitations, we might have done the official tour, but for two things: We doubted the North Koreans would grant us visas, given our outspoken opposition to Communism, and to be honest I didn’t want to go. I’ve read horror stories of visiting missionaries getting ten years of hard labor for having a sermon on a USB drive. A little over a year before our trip Otto Warmbier, a college student from Bob’s hometown of Cincinnati, who had gone on one of the official tours, was sentenced to fifteen years in prison doing hard labor for allegedly stealing a single propaganda poster. About a month after our trip he was returned to the United States having been beaten into a coma; he died not long after. I think we had good reason not to trust the North Korean government.
So that’s how we chose Dandong, China, where we’d be able to get a much closer look into North Korea and talk to some people, like our waitress, who had lived there.
Along the promenade, numerous Chinese boats offered river tours. Chinese tourists are just as fascinated to peer into the hermit kingdom as we were. We took two trips with official tour vessels—one trip downriver to see the commercial and industrial part of Sinuiju, and another upriver to see residential areas and the rural outskirts.
We were wary of the sketchy boat captains who offered to take us up one of the small tributaries into North Korea proper, where we could trade money with North Koreans for trinkets and other souvenirs. We figured the captains must bribe the North Korean army officers to look the other way while they bring in Chinese tourists. It was probably safe, but there was no guarantee that they wouldn’t hand us over to North Korean soldiers in return for a bounty for capturing American “spies.”
At one point, our commercial tour boat passed under the Sino-Korean Friendship Bridge. While we saw some occasional rail traffic passing across the bridge during our stay, nothing could pass over the neighboring bridge about fifty yards downriver. Supposedly, the North Korean government had never repaired the “Broken Bridge” after the war because it didn’t want the United States to be able to deny bombing it. The Chinese have no such reservations, and now tourists stroll out on the repaired half of the bridge for a better look into North Korea.
Industrial buildings and shipping yards stretch along the North Korean riverbank, but they aren’t much to look at. They’re mostly one- or two-story structures of pale beige or concrete gray, with an occasional bright green building mixed in, with trucks and small shipping cranes scattered among them. Some of the workers who were easily visible from our boat were busy loading the gray barges tied up to shore, while others sat idle.
Bob pointed out several Chinese Coast Guard boats cruising along the river in our immediate proximity. “Never thought I’d be happy to see the Chinese Navy.” I agreed. If our little boat broke down, we sure as hell wanted the Chinese Coast Guard picking us up before our American asses washed up on the North Korean shore.
We noticed a large Ferris wheel and what appeared to be an amusement park waterslide just before we turned around and headed back to the dock. The Ferris wheel wasn’t moving, and the place looked overgrown with brush and trees. It’s easily visible from the river promenade, and none of the locals had ever seen it move. Maybe it’s there to convince the Chinese tourists that North Koreans are having a good time.
The boat trip upriver was even more depressing. Dilapidated, beige, two-story concrete apartment homes with semi-caved-in orange-tiled roofs clung to the shore. Dingy smoke billowed from behind one row of them. A few people washed clothes in the river while others fished. Farther on, the river splits multiple times, and there are farms and smaller towns where the bright blue military guard towers identify the North Korean bank and islands. The river is quite narrow in places and it would be easy, if not for minefields and guard towers, for North Koreans to swim across into China.
We saw poverty in North Korea, but it was nothing new to us. We’ve both traveled to many poor countries. Average incomes in North Korea today are estimated at around $1,700, though even that number is almost certainly bullshit.8 The country’s capital stock is in disrepair, shortages are frequent, and Koreans have even suffered starvation.
Estimates vary widely since accurate data aren’t available, but in the 1990s, when Soviet and Chinese aid decreased, up to three million North Koreans died of starvation and related diseases. Food shortages still remain a problem. When Yeonmi Park escaped North Korea, she was astonished to be given “a whole bowl of rice and some spicy pickled cucumber . . . I had never seen a cucumber in winter.” She added that her trafficker threw away more food in his garbage than she might eat in a week in North Korea.9
North Korea remains among the poorest countries in the world, but their material poverty isn’t much worse than what we’ve seen in other parts of Asia or Africa. What is shocking is the contrast between North Korea and its neighbors, China and South Korea. We stood on a riverboat with dilapidated two-story decaying housing and poverty on one side of us, and just a few hundred yards across the river there were glistening high-rises and Chinese citizens enjoying a first-world standard of living.
At one point, we saw a lone North Korean farmer on a tractor pulling a plow through a field. This was unusual, because thus far we’d seen peasants farming only with animals and hand tools. The ancient diesel engine strained as the tractor tried to get up a slight incline, and after a few minutes of battling, the poor farmer gave up and let the tractor roll backward. It was a stark contrast between this man’s situation and the semi-trailer trucks that flew down the highway on the Chinese side of the river at sixty miles an hour. These differences are not natural; they are entirely driven by the different economic systems of North Korea and China.
The side-by-side contrast between North and South Korea is even greater. Their economic systems are even more different from each other’s than North Korea’s and China’s are, but the contrast is hard to see from the ground because of the DMZ and the lack of cities directly next to each other. You can, however, see it from space.
Nighttime satellite images reveal South Korea lit up like a Christmas tree, with a massive star of light emanating from Seoul, and lesser filaments of light flowing all across the country. Except for a small dot of light in Pyongyang and narrow stretches of light spilling across the Yalu River in China, the North is dark. Nowhere on earth is the contrast between socialism and capitalism as black and white—or, in this case, black and light—as it is here.